PBOC surveys offer clues on propensity to spend… Yesterday, the People’s Bank (PBOC) published the latest results of its quarterly surveys, in which it polls 3,200 banks, 5,000 industrial enterprises and 20,000 households across 50 cities. These offer a …
30th June 2023
This page has been updated with additional analysis since first publication. Weak April offset by strong May The stagnation in GDP in April was weaker than expected but, with the preliminary estimate pointing to a sharp rise in GDP in May, quarterly …
China’s reopening recovery is struggling for momentum and quarter-on-quarter growth will be subdued for the rest of the year. But with policymakers likely to step up support soon, the economy should still make some headway. … China Chart Pack (Jun. …
Kenya: Thugge makes his mark Kenya’s central bank hiked interest rates by 100bp, to 10.50%, at an unscheduled meeting this week. The move was pinned on an increase in inflation in May, but more than anything it seems to be a strong attempt by new governor …
Consumption stagnates as core inflation eases The May income & spending data appear to confirm that real consumption growth slowed sharply in the second quarter, while also providing encouraging signs that core inflation is gradually easing. Although data …
We are nudging up our peak ECB rate forecast in light of communications from ECB officials at Sintra and the latest economic data. We now see 25bp rate hikes in both July and September, taking the deposit rate to 4%. As a reminder, we were forecasting …
Agreement limits downside risks to economy The agreement of a loan deal between Pakistan and the IMF today should put the economy back on a more secure footing and limit the biggest downside risks. However, past experience suggests that the government …
Maybe the record-breaking temperatures in the UK in June drew comparisons with the weather typically seen in spaghetti westerns. Or perhaps we’re just bigger Clint Eastwood fans than we care to admit. Whatever the reason, we couldn’t help thinking that …
Price spikes won’t boost inflation yet Near-term inflation dynamics in India are largely driven by food prices, which account for almost half of the CPI basket. Concerns over a pick-up in food prices have been growing in recent days. The minutes of the …
The recent fall in commercial property values has not driven a flight to quality in either the retail or industrial sectors. But there has been a sharp rise in the office non-prime/prime spread, as occupiers and investors seek best-in-class assets to …
This page has been updated with additional analysis since first publication. Euro-zone HICP (June) Strength of core inflation means ECB will keep hiking June’s inflation data won’t shift the dial at the ECB. While the headline rate is on a steep downward …
National index resilient, but regional data confirm affordability matters The pause in the fall in house prices extended into June according to Nationwide, but we think it is just a matter of time before the spike in mortgage rates in recent weeks causes …
This page has been updated with additional analysis since first publication. Recession still to come this year as resilience fades The final Q1 2023 GDP data confirms that the economy steered clear of a recession at the start of 2023. But with around 60% …
Tailwind from weaker yen won’t be sustained The recent surge in the Topix to a post-1990 high has prompted many commentators to declare that Japan has finally overcome years of stagnation. There’s certainly little evidence for that in the broader …
This page was first published on Friday 30th June, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Monday 3rd July, and Caixin services and composite PMI on Wednesday 5th July. Growth now below pre-pandemic levels This …
The monthly inflation indicator released on Wednesday showed a plunge in headline inflation, but as it happens that fall was driven precisely by the two categories that the ABS strips out from its new measure of inflation excluding volatile items. …
This article has been updated with additional analysis and charts since it was first published Downhill from now for underlying inflation The end-month data rush mostly affirms our view of the economy. The first fall in underlying inflation in Tokyo in …
The Riksbank’s curious communication choices around its foreign exchange reserves earlier today highlight both the challenges depreciating currencies pose to policymakers and the particular vulnerability of the Swedish krona. To recap, the Riksbank hiked …
29th June 2023
Overview – The effects of March’s regional bank failures have yet to come through in the performance data, but transaction volumes have fallen off a cliff. Signs of distress in offices are growing as the sector faces its own credit crunch, with very few …
World trade fell in April and timelier data point to a further fall in May, partly due to a sharp drop in Chinese exports which reversed all of their rebound from earlier this year. And weak demand looks set to weigh on trade in the months ahead. …
Table of Key Forecasts Overview – EM growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and …
Renewed slowdown in payroll growth We think employment growth remained fairly resilient in June and have pencilled in a 250,000 increase in non-farm payrolls. But that would still be a sharp slowdown from May’s surge. Mild slowdown in jobs growth May’s …
Note: We discussed the economic and policy risks around the ‘greedflation’ debate in a 20-minute online briefing on Thursday, 6 th July. Watch the recording here . The surge in inflation in advanced economies has not been driven by a widening of firms’ …
The latest monthly activity data suggest that most economies struggled in the second quarter of the year. While tourism arrivals are continuing to rise, there are signs in a few places that the recovery is starting to level off, with international …
June inflation figures will keep ECB hawkish The increase in German headline and core inflation in June was mainly due to base effects. Euro-zone headline inflation probably still fell but the core rate is likely to have been little changed which will be …
Consumer anger is mounting, executives are on the defensive and politicians are scrambling to respond. The issue of ‘greedflation’ is inflaming the public discourse around inflation – but to what extent are companies really responsible for driving up …
Will activity continue to hold up, or will monetary tightening take an ever greater toll on advanced economies? How will policymakers respond to any mounting signs of weakness, and what will these macroeconomic forces do to shape the outcome for financial …
Overview – We expect most commodity prices to struggle this year against a backdrop of a stronger dollar and deteriorating investor risk appetite. Energy-related commodities will be the exception. We expect prices to tick up later in the year owing to …
ESIs point to weak growth, further disinflation The European Commission’s Economic Sentiment Indicators (ESIs) for Central and Eastern Europe (CEE) generally fell in June, and our regional-weighted headline measure points to lacklustre GDP growth this …
Sentiment weakens and points to stagnation The EC Economic Sentiment Indicator (ESI) weakened further in June and is broadly consistent with the economy stagnating at best. We expect the euro-zone’s mild recession to continue for the rest of the year as …
Banks’ exposure to commercial debt hits six-year high Net lending to commercial property remained in positive territory in May at £621m. And over the past three months, lending has totalled £2.3bn, the highest figure since June 2020. Loans for standing …
This page has been updated with additional analysis since first publication. Higher interest rates continue to take a toll on bank lending Higher interest rates continued to weigh on bank lending in May, particularly in the housing market. This effect …
The Calm Before the Storm The tick up in mortgage approvals in May sustained the partial recovery from the slump at the beginning of the year. (See Chart 1.) But the increase reflects earlier declines in mortgage rates and will be cut short by their more …
Riksbank likely to hike more than it expects The 25bp rate hike announced by the Riksbank today, which brings the key policy rate to 3.75%, had been strongly signalled at the Riksbank’s last meeting. But the accompanying statement and decisions to …
Inflation back under 2% The further fall in Spanish HICP inflation will provide some respite for households who have suffered a sharp hit to real household income over the last year. But it will have little sway over ECB decision-making as …
Vietnam’s export-driven economy improved slightly in Q2 but growth was still weak by historical standards. With the external environment likely to remain unfavourable in the second half of the year, we expect the economy to struggle in the coming …
Click here to read the full publication. While “riskier” currencies have generally had the best of it over the past couple of months, the dollar has remained rangebound and, in aggregate, is broadly unchanged on the year. With the euro-zone already in …
28th June 2023
We expect the yen ’ s weakness to reverse before long, weighing on the country ’ s stock market. And while the latter might hence hold up a bit better in US - dollar terms, we doubt it will do especially well. Today ’ s gains add to what has been a great …
Risk premia have fallen across the region over the past month. In the region’s largest economy, Nigeria, that has come on the back of a marked policy shift since President Tinubu took office in late-May. Costly fuel subsidies have been removed and the …
This page has been updated with additional analysis since first publication . Economic momentum continued in Q2 The industrial production and retail sales data for Russia for May continue a run of strong data showing that activity has recovered this year. …
Central bankers have struck a hawkish tone at the ECB’s forum in Sintra this week, suggesting that rates haven’t yet peaked and cuts are not on the cards for some time. But there were some interesting differences in tone. Most notably, the ECB and BoE …
Egypt’s path to largest MENA economy by 2050 In an Emerging Markets Update published this week, we highlighted which EMs will rise up the global league table. Within MENA, Egypt’s economy will take Saudi Arabia’s crown as the region’s largest economy by …
Investors generally revised down their interest rate expectations across Central and Eastern Europe (CEE) over the past month, partly reflecting weaker-than-expected inflation prints and more dovish communications from central bankers. Investors are now …
Higher mortgage rates have not only priced many buyers out of the market altogether, but also reduced the size of mortgage those still able to buy can take out. (See Chart 1.) The latest surge in mortgage rates to almost 6% means that, for the same …
The sharp narrowing in India’s current account deficit in Q1 was largely due to the strength in services exports. Looking ahead, we think the deficit will narrow to 1.0% of GDP across 2023 as a result of softer domestic demand and as commodity prices …
NYC employment finally returns to its pre-pandemic peak Total employment growth was resilient across metros in May, recording 0.6% 3m/3m on average. That growth was led again by Boston, Las Vegas and Charlotte, with San Antonio also seeing a rise of over …
Overview – China’s reopening recovery is struggling for momentum and quarter-on-quarter growth will be subdued for the rest of the year. But with policymakers likely to step up support soon, the economy should still make some headway. Consumer Spending – …
Improvement in core inflation not enough to appease ECB The drop in Italy’s headline and core inflation in June is encouraging. But the euro-zone core rate is unlikely to have declined significantly due to base effects related to the anniversary of the …
